The unrest in Egypt has created uncertainty and volatility in the commodity markets last week. While the real impact on supply is limited, oil prices rallied with the benchmark contract for Brent crude oil surging to as high as 103.37 on Thursday. WTI crude oil also rose to 92.84 earlier last week but price then reversed gains and settled below 90 on Friday as inventory gained more than expected.

Concerning precious metals, gold and silver found a bottom with the forming benefitting from the Middle East uncertainty and the latter finding support from its industrial metal characteristics. Gold was also boosted as the ECB remained dovish and left the policy rate unchanged at 1% last Thursday. Meanwhile, comments from Fed Chairman Ben Bernanke also supported gold. Bernanke said that US inflation remained very low. Moreover, the chairman said that the Federal budget is on 'unsustainable path'. If the Congress fails to enact changes to reduce deficits, the US dollar will weaken. This is supportive for gold.

For the week ahead, the developments in Egypt will remain in focus. Concerning macroeconomic data/events, the BOE will leave the Bank rate unchanged at 0.5% and the asset-purchase program at 200B pound on Thursday. In the US, consumer sentiment should reach an 8-month high in February while consumer credit should rise for the 3rh straight month in December. In the Eurozone, the focus will be on industrial production for December and Germany's new factory orders.

Commitments of Traders:

Speculators were bullish towards the energy complex in the week ended February 1. Net length for crude oil futures jumped +9 392 to 152 709 contracts after contracting for 4 consecutive weeks. Net length for heating oil futures added +2 360 to 40 764 contracts while that for gasoline futures gained +3 101 to 73 304 contracts. Political unrest in Egypt boosted oil prices, hence increasing net long positions for oil futures. Net shorts for natural gas, however, increased 8 609 to 219 132 contracts.

With the exception of gold, net lengths rose for the precious metal complex. Net length for gold futures dropped -9 395 to 151 194 contracts. This was the 5th consecutive weekly decline. Net length for silver futures added +2 454 to 30 680 contracts. For PGMs, net length for platinum futures and palladium futures increased +808 to 29 667 contracts and +603 to 14 4910 contracts.

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